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September 12, 2002

Value Creation Is All About Function

“ If a Primary, Secondary or Aesthetic Function isn’t Absolutely,

Positively Required then Why are We Doing it or Buying it?

Robert T. Yokl, President, The HCP Group, Ltd.

Stop, look and listen carefully  -- 80% of what your healthcare organization is doing or buying today isn’t absolutely positively required to meet their operational requirements and another 10% isn’t needed at all. Classic examples of this truth from HCP’s case files are:

So why are we doing it or buying it if is not absolutely, positively required? We are told it is because supply chain managers and clinicians don’t have the time to root out the waste and inefficiencies in their supply/value chain, but is that the really the reason?

Value-Based Evaluation/Selection System Is The Answer

Based on our experience working with healthcare organizations throughout the U.S., the real reason for this waste and inefficiency is that healthcare organizations don’t have a value-based evaluation/selection system in place to determine the relative worth of the products, services, and technologies they are buying and the related processes  they are employing.  Instead they are ‘Winging It”, utilizing a trial and error method to evaluate their products, services, technology purchases and related processes, thereby, wasting valuable time and squandering their limited resources. What should be done is to employ a standardized repeatable scientific value methodology to determine the functional components that are absolutely, positively required to operate their hospital or system. This approach to evaluation/selection is a much more effective and efficient method of determining the worth of the products, services, technologies being bought and related processes being employed than “Winging It”.

Better Decision Making and Buy-In by Employing Value-Based System

Most healthcare organizations’ approach to managing and controlling their non-salary expenses are episodic, event-oriented and reactionary in nature.  The organization only reacts to requests or complaints on or about products, services, technologies or related processes when an internal or external customer gets it on their radar screen.  A better way is to have a management system with a unifying philosophy based on value to continuously evaluate the worth and relevance of your products, services, technologies and related processes in a strategic manner.  By applying the philosophy and tenets of value management, you will recognize how a product, service or technology fits into the hierarchy of your healthcare organization’s overall product, service or technology mix, functionality and short and long term cost and quality strategies and tactics.  Then you will be truly creating value, saving time, and utilizing your limited resources in a tactical manner.